The latest issue of "The Real Deals" by Kim Eng Research compares the resale prices of ECs (Executive Condominiums) versus nearby private condos after the 5th year. The article did throw up a surprise so it's quite an interesting read for the wife and I.
And if you ask us, there is little to distinguish between private condos and ECs (especially those that are launched recently) other than the "5-year time-bar on resale" rule.
Click on the link below to read the Kim Eng report:
http://www.scribd.com/doc/104037674/The-Real-Deals-23-08-2012#fullscreen
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Monday, August 27, 2012
Saturday, August 25, 2012
Leasehold apartments on Freehold sites!
So the next time you step into a showflat, not only must you be aware of the tenure of the project but check the tenure of the site as well!
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Property developers are launching leasehold developments on freehold sites to secure future land banking opportunities.
While this enables developers to launch units at more competitive prices, analysts warn that this may impact future en bloc proceedings on these sites.
Property developer Far East Organization has launched four leasehold projects on freehold land, including The Shore Residences and Cabana.
Analysts said developers are able to launch these developments at more competitive prices, which are 10 to 15% lower than freehold properties in the surrounding area.
Developers will also be able to lay claim to these sites after the lease expires.
Donald Han, special advisor at HSR International Realtors, said: "A lot of developers who have been well-entrenched in the market would like to keep that as a safeguard, so they have continuous land banking opportunity to develop."
According to the Singapore Land Authority, owners of freehold sites have the right to sell part of their tenure in leasehold portions and retain the reversionary interest.
Analysts warn that investors who are considering future en bloc opportunities may want to think twice about investing in such developments.
Mr Han said: "When you are looking into the leasehold tenure, when it is run closer to your 30 to 40 years, it is harder to get an opportunity to extend the lease unless you negotiate directly with your superior land owner."
Analysts said that leasehold developments on freehold sites are already common in commercial projects such as Ocean Financial Centre in the Central Business District.
On the residential front, market watchers said developers may well consider launching 30-year leasehold projects on their freehold sites to cater to the demands of an ageing population.
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Property developers are launching leasehold developments on freehold sites to secure future land banking opportunities.
While this enables developers to launch units at more competitive prices, analysts warn that this may impact future en bloc proceedings on these sites.
Property developer Far East Organization has launched four leasehold projects on freehold land, including The Shore Residences and Cabana.
Analysts said developers are able to launch these developments at more competitive prices, which are 10 to 15% lower than freehold properties in the surrounding area.
Developers will also be able to lay claim to these sites after the lease expires.
Donald Han, special advisor at HSR International Realtors, said: "A lot of developers who have been well-entrenched in the market would like to keep that as a safeguard, so they have continuous land banking opportunity to develop."
According to the Singapore Land Authority, owners of freehold sites have the right to sell part of their tenure in leasehold portions and retain the reversionary interest.
Analysts warn that investors who are considering future en bloc opportunities may want to think twice about investing in such developments.
Mr Han said: "When you are looking into the leasehold tenure, when it is run closer to your 30 to 40 years, it is harder to get an opportunity to extend the lease unless you negotiate directly with your superior land owner."
Analysts said that leasehold developments on freehold sites are already common in commercial projects such as Ocean Financial Centre in the Central Business District.
On the residential front, market watchers said developers may well consider launching 30-year leasehold projects on their freehold sites to cater to the demands of an ageing population.
Source: Channel News Asia
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Thursday, August 23, 2012
Not freehold? No problem!
About three in four private residential projects launched in the past year are
99-year leasehold developments, according to some property
analysts.
Demand for these units has been strong, and market watchers said home buyers should be aware of what they are buying into, as the capital value of leasehold properties depreciates progressively as the development ages.
Experts said the price premium for a freehold property could be as high as 40%.
Demand for many new 99-year leasehold private homes has been red hot, partly driven by the large number of such projects in the market.
They account for about 77% of new private homes placed for sale between June 2011 and June 2012, according to SLP International Property Consultants.
Analysts said there's also a mindset change among some home buyers now and they are highly mobile when it comes to housing.
For instance, some buyers may take a short-term view on their home purchase, opting to move to another property after five to 10 years, so it doesn't matter if the project is freehold or not.
For investors, market watchers said new leasehold units offer a better rental yield at 3.5 to 4.2%, compared to about 2.5 to 3.% for freehold homes.
But those looking at wealth preservation or handing down their homes to their children will be better off with a freehold property.
Ku Swee Yong, CEO, International Property Advisor, said: "99-year leasehold is always considered with a little bit of discount. The theoretical treatment of a 99-year leasehold land should be a depreciation of about 1% per year.
"So if you were to buy a property at $1,000 psf, each year its value should depreciate by $10 psf."
Nicholas Mak, executive director, SLP International Property Consultants, said: "For freehold properties, when the property is more than 20 years old and is ageing, and it is time for re-development perhaps through collective sale, the value of the land in a way is a bit more preserved because the developer would not need to pay the government a land premium to top-up the lease."
Analysts said a freehold property also commands a price premium over a comparable leasehold project.
This price premium could vary between 10 and 40%.
Mr Mak said: "Let's say we have two identical projects... and the only difference is their land tenure - one freehold, the other a 99-year leasehold. The freehold will be priced higher than leasehold projects, anywhere from 10 to 30% or even as much as 40%."
Leasehold or freehold, comments gathered on Channel NewsAsia's Facebook page are mixed.
But most agree that location is still the most important factor.
The wife and I have friends who will only go for freehold (or 999-year at the least) properties, as they believe that the value of such property are better preserved. We, on the other hand, have never owned a freehold property, mainly because we are unwilling to pay the price premium. And if you are buying for own-stay and is prepared to hold out, chances are that you will not lose money even with an older leasehold property... at least in our experience anyway. (* fingers crossed *)
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Demand for these units has been strong, and market watchers said home buyers should be aware of what they are buying into, as the capital value of leasehold properties depreciates progressively as the development ages.
Experts said the price premium for a freehold property could be as high as 40%.
Demand for many new 99-year leasehold private homes has been red hot, partly driven by the large number of such projects in the market.
They account for about 77% of new private homes placed for sale between June 2011 and June 2012, according to SLP International Property Consultants.
Analysts said there's also a mindset change among some home buyers now and they are highly mobile when it comes to housing.
For instance, some buyers may take a short-term view on their home purchase, opting to move to another property after five to 10 years, so it doesn't matter if the project is freehold or not.
For investors, market watchers said new leasehold units offer a better rental yield at 3.5 to 4.2%, compared to about 2.5 to 3.% for freehold homes.
But those looking at wealth preservation or handing down their homes to their children will be better off with a freehold property.
Ku Swee Yong, CEO, International Property Advisor, said: "99-year leasehold is always considered with a little bit of discount. The theoretical treatment of a 99-year leasehold land should be a depreciation of about 1% per year.
"So if you were to buy a property at $1,000 psf, each year its value should depreciate by $10 psf."
Nicholas Mak, executive director, SLP International Property Consultants, said: "For freehold properties, when the property is more than 20 years old and is ageing, and it is time for re-development perhaps through collective sale, the value of the land in a way is a bit more preserved because the developer would not need to pay the government a land premium to top-up the lease."
Analysts said a freehold property also commands a price premium over a comparable leasehold project.
This price premium could vary between 10 and 40%.
Mr Mak said: "Let's say we have two identical projects... and the only difference is their land tenure - one freehold, the other a 99-year leasehold. The freehold will be priced higher than leasehold projects, anywhere from 10 to 30% or even as much as 40%."
Leasehold or freehold, comments gathered on Channel NewsAsia's Facebook page are mixed.
But most agree that location is still the most important factor.
Source: Channel News Asia
The wife and I have friends who will only go for freehold (or 999-year at the least) properties, as they believe that the value of such property are better preserved. We, on the other hand, have never owned a freehold property, mainly because we are unwilling to pay the price premium. And if you are buying for own-stay and is prepared to hold out, chances are that you will not lose money even with an older leasehold property... at least in our experience anyway. (* fingers crossed *)
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Wednesday, August 22, 2012
Wing Tai: Property market price correction looming!
Property developer Wing Tai foresees a growing possibility of a correction in
Singapore's property market.
This as the firm announced its fourth quarter (Q4) earnings on Tuesday.
At the results briefing, Wing Tai said it is targetting to launch its latest freehold residential development with 337 residential units with one commercial unit next year.
Formerly zoned for industrial use, the developer has successfully applied to change the use of its former headquarters to residential.
Located at Tampines Road near Kovan MRT station, Wing Tai said this latest project which sits on land acquired in the 1960s would help capture any potential uptick in the property market.
But the property developer believes the market is set for a correction ahead.
Chairman of Wing Tai Holdings, Cheng Wai Keung, said: "A number of you have been asking why have we not been tendering for URA projects and we have not been active in the market for quite some time.
"I would still maintain that the correction will be coming and the way I look at it, is that if there is a cycle, if you take away that 2008 temporary drop, you smooth out the curve, it is actually the eighth or ninth year of the rise in this cycle."
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This as the firm announced its fourth quarter (Q4) earnings on Tuesday.
At the results briefing, Wing Tai said it is targetting to launch its latest freehold residential development with 337 residential units with one commercial unit next year.
Formerly zoned for industrial use, the developer has successfully applied to change the use of its former headquarters to residential.
Located at Tampines Road near Kovan MRT station, Wing Tai said this latest project which sits on land acquired in the 1960s would help capture any potential uptick in the property market.
But the property developer believes the market is set for a correction ahead.
Chairman of Wing Tai Holdings, Cheng Wai Keung, said: "A number of you have been asking why have we not been tendering for URA projects and we have not been active in the market for quite some time.
"I would still maintain that the correction will be coming and the way I look at it, is that if there is a cycle, if you take away that 2008 temporary drop, you smooth out the curve, it is actually the eighth or ninth year of the rise in this cycle."
Source: Channel News Asia
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Monday, August 20, 2012
Kim Eng Research: July Residential Update
Here is the latest report from the good folks at Maybank Kim Eng:
http://www.scribd.com/doc/103330805/Singapore-Residential-Update-July-2012#fullscreen
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Tuesday, August 14, 2012
50-year housing loan: Down the Californian road?
Longer mortgage tenures could have adverse implications for the property market,
borrowers and banks if it becomes more widespread.
Deputy Prime Minister Tharman Shanmugaratnam gave the assessment in a written reply to Parliament on Monday.
He added that the government will continue to closely monitor the property market.
Stretching a home loan out over 50 years does translate to a lower monthly instalment. But this is just an illusion of affordability.
Mr Tharman said that the borrower ends up paying more interest. The repayment period could also stretch past the retirement age, when the borrower may no longer have a steady income stream.
According to analysts, the higher interest rate on a longer term loan would mean that loan repayment can be easily be 20% more in the long run, compared to taking a 30-year loan.
The government said it will monitor mortgage tenure in the context of how banks structure their mortgage products, as well as banks' underwriting standards.
Still, analysts said the government is wary such loans could fuel speculative buying and undo its efforts to cool the property market.
Alfred Chan, director, Financial Institutions, Fitch Ratings, said: "Had property prices not been where they are, let's say (if) they were to be increasing at a more moderate pace, I think affordability wouldn't be an issue and banks wouldn't need to go out that aggressively to offer 50-year loan tenors."
Analysts added that the move to offer 50-year tenor loans also reflects the stiff competition among banks.
Loan yields in Singapore are at 2% compared to emerging markets like Indonesia, with 6%.
Timothy Kua, director, SmartLoans.sg, said: "I don't think the property market has cooled very significantly. It is still fairly healthy and UOB's 50-year loan tenor is probably more of an inter-bank competitive move to try and win over a bigger chunk of the mortgage market."
The government said its cooling measures in recent years have helped reduce the risk of a sharp escalation in property prices.
Still, it has cause for concern.
Fifty-year tenor loans first appeared six years ago in California, driven by sky-rocketing home prices.
California now has the second-highest foreclosure rate in the United States as of last July. According to reports, its foreclosure rate is one in every 239 households.
Deputy Prime Minister Tharman Shanmugaratnam gave the assessment in a written reply to Parliament on Monday.
He added that the government will continue to closely monitor the property market.
Stretching a home loan out over 50 years does translate to a lower monthly instalment. But this is just an illusion of affordability.
Mr Tharman said that the borrower ends up paying more interest. The repayment period could also stretch past the retirement age, when the borrower may no longer have a steady income stream.
According to analysts, the higher interest rate on a longer term loan would mean that loan repayment can be easily be 20% more in the long run, compared to taking a 30-year loan.
The government said it will monitor mortgage tenure in the context of how banks structure their mortgage products, as well as banks' underwriting standards.
Still, analysts said the government is wary such loans could fuel speculative buying and undo its efforts to cool the property market.
Alfred Chan, director, Financial Institutions, Fitch Ratings, said: "Had property prices not been where they are, let's say (if) they were to be increasing at a more moderate pace, I think affordability wouldn't be an issue and banks wouldn't need to go out that aggressively to offer 50-year loan tenors."
Analysts added that the move to offer 50-year tenor loans also reflects the stiff competition among banks.
Loan yields in Singapore are at 2% compared to emerging markets like Indonesia, with 6%.
Timothy Kua, director, SmartLoans.sg, said: "I don't think the property market has cooled very significantly. It is still fairly healthy and UOB's 50-year loan tenor is probably more of an inter-bank competitive move to try and win over a bigger chunk of the mortgage market."
The government said its cooling measures in recent years have helped reduce the risk of a sharp escalation in property prices.
Still, it has cause for concern.
Fifty-year tenor loans first appeared six years ago in California, driven by sky-rocketing home prices.
California now has the second-highest foreclosure rate in the United States as of last July. According to reports, its foreclosure rate is one in every 239 households.
Source: Channel News Asia
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Thursday, August 9, 2012
Singapore turns 47: Our THREE wishes for Singaporean...
Now that the fireworks are done and rumours over a certain senior (make that VERY senior) member of cabinet not being able to attend this year's NDP is quashed, the wife and I would like to share with you all our 3 wishes for Singaporean on this joyous occasion:
1. May we never suffer the indignation of having a BTO/HDB project built within a 50-metre radius of our Condo/DBSS apartments. And same goes with hospices and nursing homes too! Surely with these being so close to our apartments, our view will be affected and the resale price will fall, right?!
2. And speaking of hospice and nursing home, may we never have to end up in one of those when we grow old. They will likely be located in some god-forsaken parts of Singapore far far away from those nice (younger) folks living in their public and private housing estates, or worse, in JB.
3. And for shoebox-owning couples who are looking to be tapped like an EZ-link card or have a bao stuffed in their ovens this National Night, may you be allowed to keep your shoeboxes and buy a second (bigger) HDB flat to live in once your baos are... steamed. Since you are starting a family purely because the government wants more babies, they surely must do better than them baby bonuses and 6-month maternity leave, right?! Heck, they should probably throw in the $900 stroller and first pick at any primary school too...
Disclaimer: DO NOT take us seriously on the above!
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1. May we never suffer the indignation of having a BTO/HDB project built within a 50-metre radius of our Condo/DBSS apartments. And same goes with hospices and nursing homes too! Surely with these being so close to our apartments, our view will be affected and the resale price will fall, right?!
2. And speaking of hospice and nursing home, may we never have to end up in one of those when we grow old. They will likely be located in some god-forsaken parts of Singapore far far away from those nice (younger) folks living in their public and private housing estates, or worse, in JB.
3. And for shoebox-owning couples who are looking to be tapped like an EZ-link card or have a bao stuffed in their ovens this National Night, may you be allowed to keep your shoeboxes and buy a second (bigger) HDB flat to live in once your baos are... steamed. Since you are starting a family purely because the government wants more babies, they surely must do better than them baby bonuses and 6-month maternity leave, right?! Heck, they should probably throw in the $900 stroller and first pick at any primary school too...
Disclaimer: DO NOT take us seriously on the above!
Happy Birthday, Singapore!
Tuesday, August 7, 2012
"Renting" their way to popular schools unfair...Really?
The wife and I are guilty of “paying” our way to our son’s primary 1 place.
Instead of renting, we bought an apartment within 1-km of his school and sold it after he secured his place. But to be fair, we actually did stay in the apartment for over a year.
And frankly, we have no issue with parents renting/buying an apartment to get their kids into the primary school of their choice, as long as they have been living in the apartment concerned prior to registration.
To those who feel that this is unfair: what about, for example, the guaranteed places given to younger siblings of kids that are already studying in the primary school? One might argue the merits of having siblings studying in the same school or even insists that it is a necessity to entice married couples to have more kids. But how fair is that to the other kid whose home is next-door to the school but has no older sibling?
So whether it's a kid with older sibling, an old boy/girl (who may have absolutely no contact whatsoever with his/her alma mata until time for P1 registration), someone who is affiliated with the church or clan association, or a grassroot leader who is staying nowhere near to the primary school concerned, there will always be some “privileged group” who are granted priority ahead of others.
And in the words of one of our ex-boss: Yes, it's an unfair world out there so you just gotta suck it up!
Reference: "Parents 'renting' their way to popular schools?" - The Straits Times, 7th Aug 2012
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Instead of renting, we bought an apartment within 1-km of his school and sold it after he secured his place. But to be fair, we actually did stay in the apartment for over a year.
And frankly, we have no issue with parents renting/buying an apartment to get their kids into the primary school of their choice, as long as they have been living in the apartment concerned prior to registration.
To those who feel that this is unfair: what about, for example, the guaranteed places given to younger siblings of kids that are already studying in the primary school? One might argue the merits of having siblings studying in the same school or even insists that it is a necessity to entice married couples to have more kids. But how fair is that to the other kid whose home is next-door to the school but has no older sibling?
So whether it's a kid with older sibling, an old boy/girl (who may have absolutely no contact whatsoever with his/her alma mata until time for P1 registration), someone who is affiliated with the church or clan association, or a grassroot leader who is staying nowhere near to the primary school concerned, there will always be some “privileged group” who are granted priority ahead of others.
And in the words of one of our ex-boss: Yes, it's an unfair world out there so you just gotta suck it up!
Reference: "Parents 'renting' their way to popular schools?" - The Straits Times, 7th Aug 2012
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Wednesday, August 1, 2012
Le Bisellahause on Shoeboxes...
The wife and I must admit we have not seen any episode of this locally-produced sitcom about property agents (yet).
However, we chanced upon episode 3 at xinmsn and the caption "a humorous take on condominiums and shoebox size properties in Singapore" caught our attention.
A parody that mimics real life? We'll let you be the judge of that.
By the way, we like the answer from the young fella in the strip-tie..."Shoebox? self-stay is too small but for investment is okay". At least he was honest about it!
Click on link below to watch the video:
http://video.xin.msn.com/?mkt=en-sg&vid=f863b346-3839-4f4c-8e24-e534db598e13&from=sharepermalink&src=v5:share:sharepermalink:
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However, we chanced upon episode 3 at xinmsn and the caption "a humorous take on condominiums and shoebox size properties in Singapore" caught our attention.
A parody that mimics real life? We'll let you be the judge of that.
By the way, we like the answer from the young fella in the strip-tie..."Shoebox? self-stay is too small but for investment is okay". At least he was honest about it!
Click on link below to watch the video:
http://video.xin.msn.com/?mkt=en-sg&vid=f863b346-3839-4f4c-8e24-e534db598e13&from=sharepermalink&src=v5:share:sharepermalink:
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